Startup India Action Plan Launch

Today Prime Minister Narendra Modi launched the Startup India Action Plan. The basic idea that all the government officials echoed the entire day was to reduce the government intervention and asked for what “not to do”.

The government has categorised its initiatives under 3 categories, Simplification and Handholding, Funding Support and Industry Academia Partnership. If you missed the event, here are the initiatives under each of the schemes —

Simplification and Handholding

1. Government has allowed self-certified compliance of 6 labor laws and 3 environmental laws. Lesser regulatory formalities!
2. Creation of a Startup India hub to help entrepreneurs across all of their routine works; funding, networking, legal, finance etc.
3. Rolling out a mobile app for interacting with Government and relevant stakeholders. Also via the mobile app, 1 day company registration!. Mobile app to be launched on 1st April 2016, not sure if 1 day company registration will be a part of it.

Single day company registration via a mobile app

4. Huge focus on patents. Government to bear the cost of assisting you with attorneys to file the patents, 80% reduction as compared to normal companies in the fees of filing a patent. Also a fast track approval process exclusively for startups.

5. To sell to the government, experience will no longer be mandatory hence opening up access to government markets for startups.

6. 90 days exit for startups.

Funding Support and Incentives

1. “Fund of Funds” corpus of INR 10k crore for funds to raise funds :P
2. Tax exemption for startups for 3 years.

For more details, refer to the Startup India action plan document.

Funding Support and Incentives

1. Organising startup fests to promote products.
2. Creating innovation awards, tinkerer labs etc.
3. Building innovation institute at some NITs and second tier IIMs.
4. Building research parks at IITs modelled on the success of the research park of IIT Madras.
5. Special initiatives were announced for the bio-technology sector.
6. Annual Incubator Challenge to recognise and promote successsful incubators in the country.

I have been specially pondering over the income tax exemption rule. Some issues/clarifications on that

• It is important to understand how government defines startups. An excerpt from the official document below.

Startup means an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.

• Even if your startup fits the above criteria, all such tax exemptions will have to obtain certification from an Inter-Ministerial board which will be established for this purpose. Not too convenient eh!
• Most importantly, something that I am not sure about yet is whether the exemptions are valid only for startups registered after 1st April 2016. If you have any information on that, please let me know.

Overall I feel government has taken a major step in it’s aim of changing the societial mindset to encourage people to pursue entrepreneurship. To be job creators instead of job seekers!

For complete official release from the government, please find the complete Startup India Action Plan here.